CICB President remains hopeful4 September 2006
Umberto Cilião Sachelli is proud of the level of exports achieved over the past twelve months in spite of the difficulties provoked by factors such as high interest rates, high taxes and by the appreciation of the real. According to Sachelli: 'All the leather production chain needs is for the Brazilian sector to be given the same conditions as those enjoyed by our competitors, such as accelerating the return of tax credits accumulated in exports, improving credit lines and reducing red-tape which inhibits Brazil's ability to compete.' If this were achieved, Sachelli believes that the leather-footwear chain would then be able to contribute investments of nearly US$1 billion, increasing export receipts to US$10 billion and creating 650,000 new jobs. The association would also like to see an overhaul of the tax recovery system. It currently takes between six months and one year for taxes already paid on purchasing materials and chemicals to be recovered. Sachelli and CICB successfully lobbied the government to maintain the 7% tax on wet-blue (the government had planned to phase out this tax by 2007). According to Sachelli, 'if the tax is not maintained, in the short term this will affect the price of raw materials. In the long term it will discourage tanners from investing in the facilities to produce finished leather. The reason we ask for this small protection measure is to level the playing field with competitors who benefit from a much lower interest rate.' This is known in the sector as the 'custo Brazil' or the price of operating in Brazil. 'However retention of the wet-blue export tax at 7% has been a good support for the sector, particularly in the light of the difficulties with the dollar.' FMD Sachelli classifies the period from November 2005-January 2006 as 'very worrying' for the sector in Brazil due to the discovery of FMD which hit domestic livestock. This had a knock on effect on exports. However, by February the kill began to normalise and subsequently meat exports recommenced. Despite the outbreak, Sachelli is upbeat about prospects for the `coming year and expects the global economy to remain stable, which is good for the sector.